Barclays sets aside another £700m for PPI claims as profits leap to £2.34bn

28 July 2017

Barclays has seen half-year profits surge, but said it would have to fork out an extra £700 million to meet compensation claims for mis-selling payment protection insurance (PPI).

Group pre-tax profits jumped 13% to £2.34 billion for the six months ending in June, as the lender signalled the end of a major corporate restructure designed to focus on its core UK and US business.

However, the legacy of the PPI scandal continued to affect the bank, with core profit before tax slipping 25% to £2.98 billion in response to the extra PPI provision.

Chief executive Jes Staley said: "Our business is now radically simplified, the restructuring is complete, our capital ratio is within our end-state target range, and, while we are also working to put conduct issues behind us, we can now focus on what matters most to our shareholders: improving group returns."

The second quarter marked a milestone for the bank as it completed "two critically important planks" of its strategy to offload unwanted businesses.

The banking giant said it had driven down its majority shareholding in Barclays Africa Group to the extent where it can now apply for regulatory deconsolidation.

Barclays expects to complete this process next year.

It has also run down its non-core unit ahead of schedule to below £25 billion in risk-weighted assets, meaning it could close the operation six months early.

Mr Staley added: "Accomplishing both of these milestones marks an end to the restructuring of the Barclays Group, and brings forward the date when our shareholders can benefit from the full earnings power of this business.

"That power is evident once again in the performance reported today."

However, factoring in a £1.4 billion loss on the sale of 33.7% of Barclays Africa Group and a further £1.1 billion charge linked to the disposal, the bank recorded an attributable loss of £1.2 billion for the half-year.

This was down from a £1.1 billion profit over the same period in 2016.

The results come after a testing first half for Mr Staley, who is facing a regulatory investigation into his conduct after he attempted to identify a whistleblower.

Seperately, Barclays former chief executive and three top bankers have been charged with conspiracy to commit fraud over a June 2008 investor cash-call.

The group, ex-boss John Varley, Roger Jenkins, Thomas Kalaris and Richard Boath, will all stand trial in 2019 over alleged side deals struck at the height of the financial crisis.

Looking forward, the bank said it expects to boost its performance over the next two years thanks to a £1 billion drop in costs.